Most of the firms I help are struggling with their production.
Because they build the business around themselves it means when they reach retirement age they have to sell it as it totally depends on them.
What I teach them as Peter Locandro said in his video with Jamie Johns in our WIZE Vault is:
“The difference between Ed and other coaches/mentors to Accountants & Bookkeepers was that they teach you how to build P&L and everything they taught was for YOU to do (increase your clients’ fees, sell more advisory, deliver high-value project work etc). Ed teaches you how to invest in your Balance Sheet. He shows you how to put in teams and how to train them so that the business can run without you. So you don’t have to sell it when you retire if you don’t want to because it’s showing you an ROI of 25%pa plus instead, without you needing to be IN it.”
When you sell, you end up losing a sizeable chunk to the tax office leaving you a Net (after-tax) amount to invest into Shares (dividends 5% to 8%) or Real Estate (rent 3% net) or Cash (earning interest of 0-2%).
So the KPIs I work by is a 25% ROI when the business is working without you as an investment does. As you can see, it’s pretty hard, almost impossible, to find a return that comes close to that which I can get from my own business.
However to earn the money that one wants, namely, some say they want to earn $100,000pa passively and others say $250,000pa passively, it comes back to the size of their business.
To achieve $250,000 passive income it will need to be at $1,000,000 turnover and doing an EBIT of 25% with the right person as CEO running it. This should be where the owner focuses their time. It can take years to attract/buy fees to get it to $1m and to find the right person to be CEO.
Most of the firms I coach are on the way there, and the number one stage we focus on is: Getting your house in order.
This can take several years if they have the wrong people in the wrong seats, to begin with, and they need to either move people out or wait for them to leave. Most people wait for them to leave, including me.
We waited for our Receptionist to resign before we adopted a virtual receptionist service. If she had not resigned we would still have her and it would have taken a few more years until she left before I would have changed to a virtual receptionist. Most accountants are like me. If they have the wrong person in the wrong seat (after learning about the Ideal Team Structure) they generally wait for them to leave.
Without doubt, most if not all of the firms I’ve coached and who have used WIZE Mentoring have had an enormous paradigm shift in the way they should run their firm.
And all have adored a new mindset and working towards building that Ideal Team Structure and Organization Board.
When I think about it, we are not helping them to build a business and sell it. At which point they lose half of it in capital gains tax (if they sold it) and they need to invest the Net Proceeds somewhere anyway.
We are saying you don’t have to sell it (and lose half in CGT) and it’s possible to turn it into an investment (without paying any CGT) that pays an ROI better than anything else out there (shares or property) as I have done.
Our “success KPI “ is not quick, flashy spikes in revenue OR if one “sells it”
Our “success KPI” is to build the teams and systems so it can run without you and pays you a 25% ROI, which is better than you can get elsewhere.
P.S. Whenever you’re ready… here are 4 ways we can help you grow your Accounting or Bookkeeping business:
1. Grab a free copy of our book – Accountants 20-Hour Workweek
It’s the blueprint to structure, staff and scale your firm whilst dramatically reducing your work hours. — Click Here
2. Join the Wize WaterCooler and connect with other Accountants who are scaling too
It’s our new Facebook community where business-minded Accountants and Bookkeepers learn to build a firm that runs without them. — Click Here
3. Join our new WizePulse Implementation Program
We’re putting together a new mentoring case study group this month. If you’d like to get the plan, tools and advice from the Wize Mentors to scale your firm… just send us a message with the word “Pulse” – Click Here
4. Work with the Wize Guys privately
If you’d like to work directly with the Wize Mentor team to take you from stuck to scale…just send us a message with the word “Growth”… tell us a little about your firm and what you’d like help with, and we’ll get you all the details! – Click Here